US equities bounce back, but technical signal awaited
US equities have regained ground, but we are still waiting for a technical signal to tell us whether the correction is over. Europe and Asia are weaker. The overall impression is that financial markets are now more concerned about the inflation risk than the US recession.
There are three interesting aspects that we would like to highlight in our intermarket dashboards. First, the stabilisation in equity markets seems to be continuing. The ratio of the S&P500 to the VIX continues to recover from last week’s lows, while at the same time gold is declining relative to the Dow and the dollar. The ratio of commodities to T-30 yields is above its 50-day moving average. The second aspect concerns the S&P500, which is back above its 200-day exponential moving average. The real turning point could come from the bullish cross between the 50 and 200 day averages. Commodities are still showing signs of acceleration, while bonds seem to be moving sideways in the very short term. The third interesting aspect is the correlation between equities and bonds, which has fallen below zero and turned negative, reaching its lowest level since early autumn. The overall impression is that the markets are returning to the hypothesis of high inflation rather than recession.
On the macroeconomic front, German IFO business confidence data, US house price data and the new CB consumer confidence survey are due out today.
Our forecasts suggest that the recovery in US equity markets could continue. However, the situation in Europe and Asia is more uncertain. On the bond front, US yields are also expected to rise today, while a wait-and-see signal is expected for European corporates. On the currency front, the dollar is showing signs of recovery. Volatility should continue to fall.
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NOTES AND WARNINGS
Data compiled by kbmeter.com. Analysis date: 25 March 2025 - 7:26 AM GMT+1
This content is provided for informational purposes only and should not be considered financial advice. All scores and assessments are based on the previous trading day’s closing prices. Futures indications refer to the date and time of the analysis.
